Features of Health Savings Account

One unique as well as interesting feature of an HSA is that the money in the HSA account can be  invested in similar ways to how money in an IRA account can be invested.  The same kinds of rules and restrictions apply to HSAs in regards to investing money as well as deferring taxes on earnings.

• All earnings on investments in an HSA account are non-taxable for as long as the money stays in the account or is withdrawn for the purpose of paying medical expenses.
• If earnings are withdrawn for non-medical purposes, and the owner is under the age of 65, then taxes will have to be paid on the withdrawals.
• Because contributions to an HSA are made with pre-tax dollars, it gives you the ability to reduce your income taxes.

Combining an HSA with a HDHP also gives the account owner the ability to use funds in the HSA account to pay for their annual health insurance deductible and to pay for medical expenses that their policy doesn’t cover.

There are limits to the amounts to the amounts you can contribute to HSAs in one year.  The limit for individuals is $2,850 and for a family it is $5,650.

An HSA has more extensive coverage for medical expenses than most conventional health care plans.  The coverage may include the following:

• Preventative health care visits
• Physical therapy, including chiropractor visits
• Mental therapy, including psychiatry, psychotherapy and psychology
• Dental treatment
• Maternity expenses
• Prescription and nonprescription drugs
• Alternative health care for procedures like acupuncture and homeopathy
• Travel and accommodation expenses that relate to health care

HSAs are potentially a great option for individuals and families who want to have a high degree of flexibility in their health care that they can manage on their own without being required to visit network health care providers or complete lots of paperwork.

The ability for owners over the age of 65 to use the funds in the account for both medical as well as non-medical purposes means that an HSA, unlike many other types of health insurance plans, can benefit practically anyone, including individuals that have medical expenses on a continual basis as well as healthy individuals that do not have a lot of ongoing costs.